Nigeria’s Green Bond Market Reaches N55.5bn

By Aduragbemi Omiyale

Between 2017 and 2021, Nigeria’s green bond market increased to N55.5 billion, the chief executive of the Nigerian Exchange (NGX) Limited, Mr Temi Popoola, has said.

Despite this significant progress, the exchange is looking to have more issuances of green bonds, Mr Popoola added during the Sustainable Finance Training 2021 hosted by the NGX in collaboration with the International Finance Corporation (IFC).

According to him, the exchange is committed to fostering the growth of sustainable financial products which integrate the financial risks and opportunities associated with climate change and other environmental challenges.

Mr Popoola, in his opening remarks, said Sub-Saharan Africa is the least responsible for global climate change but remains one of the most vulnerable to the risk posed by climate change.

Citing the World Meteorological Organization State of the Climate in Africa Report 2020, he stated that the investment in climate adaptation for Sub-Saharan Africa would cost between $30 to $50 billion each year over the next decade, or roughly two to three per cent of GDP.

He revealed that the limited flow of climate finance remains a major issue for the implementation of mitigation and adaptation actions in Africa particularly Nigeria.

He further stated, “In recognition of the climate finance needs particularly in Nigeria and the urgent action required to combat climate change as well as its impact as enshrined in the Paris Agreement on Climate Change, NGX in 2016 conceptualized and developed the Green Bond Product Paper which was embraced and championed by the Debt Management Office and the Federal Ministry of Environment.

“This effort led to the issuance of the maiden N10.69 billion ($25.8 million) 13.48 per cent 5-year green bond in 2017 to fund projects to develop renewable energy.

“This was sequel to the ratification of the Paris Climate Agreement by the Federal Government of Nigeria which necessitated the need for long term capital to fulfil Nigeria’s Nationally Determined Contributions (NDCs) in reducing greenhouse gas emissions and ending gas flaring by 2030.”

“The second tranche, N15 billion ($36.1 million) 14.5 per cent 7-year green bond was issued in June 2019and was over-subscribed.

“The sovereign issuance paved way for the corporate green bond market to emerge with N15 billion ($36.1 million) 15.5 per cent 5-year Fixed Rate Senior Unsecured Green Bond by Access Bank and N8.5 billion ($20.5 million) 15.6 per cent 15-year Guaranteed Fixed Rate Senior Green Infrastructure Bond by North-South Power Company.

“On April 15, 2021, North-South Power Company (NSP) issued its second N6.33 billion ($15.3 million) 10-year 12 per cent Fixed Rate Series 2 Senior Green Bonds due 2031.

“It is noteworthy that all the corporate and sovereign Green Bonds are listed on NGX. These follow-on issuances have further increased investible instruments and deepened the Nigerian green bond market. It is noteworthy that the size of the green bond market is currently N55.52 billion ($133.8 million),” the NGX CEO added.

NGX said it remains committed to fostering the growth of sustainable financial products, which integrate the financial risks and opportunities associated with climate change and other environmental challenges.